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USD/CAD: Recovery Could Face Resistance Near 1.2400

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Aayush Jindal

Key Highlights

  • USD/CAD declined heavily and tested the 1.2250 support zone.
  • It is consolidating and likely to face resistance near 1.2380 and 1.2400.
  • EUR/USD is struggling to clear the 1.2050 and 1.2060 resistance levels.
  • GBP/USD failed to clear 1.3940 and it is showing a few bearish signs.

USD/CAD Technical Analysis

In the past few days, the US Dollar declined steadily from well above 1.2500 against the Canadian Dollar. USD/CAD broke the 1.2480 and 1.2400 support levels to move into a bearish zone.

Looking at the 4-hours chart, the pair even traded below the 1.2350 level. There was a close below 1.2400, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

The pair traded as low as 1.2266 before it started consolidating losses. Recently, there was a minor upward move above the 1.2300 level.

On the upside, the first key resistance is near the 1.2360 level. It is near the 23.6% Fib retracement level of the downward move from the 1.2654 high to 1.2266 low. The main resistance is near the 1.2380 and 1.2400 levels.

A close above the 1.2400 level might lead the pair towards the 100 simple moving average (red, 4-hours). The 50% Fib retracement level of the downward move from the 1.2654 high to 1.2266 low is near 1.2460 to act as a hurdle.

On the downside, the 1.2265 and 1.2250 levels are important supports zones. A close below 1.2250 might call for a drop towards the 1.2000 level.

Looking at EUR/USD, the pair is facing hurdle near 1.2060 and it might dive below 1.2000. Similarly, GBP/USD must climb above 1.3920 to avoid a bearish break.

Economic Releases

  • Germany’s Services PMI for April 2021 - Forecast 50.1, versus 50.1 previous.
  • Euro Zone Services PMI for April 2021 – Forecast 50.3, versus 50.3 previous.
  • US Services PMI for April 2021 – Forecast 63.1, versus 63.1 previous.
  • US ISM Services Index for April 2021 – Forecast 64.3, versus 63.7 previous.
  • US ADP Employment Change for April 2021 - Forecast 810K, versus 517K previous.
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